Gold futures close with a more than $7 loss

VirginiaHarrison

SAN FRANCISCO (MarketWatch) — Gold futures closed with a more than $7-an-ounce loss Tuesday, pressured by strength in the U.S. dollar as traders left their defensive shells and mulled the latest developments in Libya.

Reports that Libyan leader Moammar Gadhafi may be discussing a deal with opposition members to step down, “did soften things overnight and the metals have had a hard time recovering,” said Charles Nedoss, senior market strategist with Olympus Futures in Chicago.

“The dollar strength isn’t helping either,” he said.

Gold for April delivery
GCJ11
closed $7.30, or 0.5%, lower to finish at $1,427.20 an ounce on the Comex division of the New York Mercantile Exchange.

The metal closed at $1,434.50 an ounce on Monday after it reached an intraday high past $1,445 an ounce.

Silver tracked gold lower, leaving a three-decade best.

A spokesman with Libya’s opposition forces had said Gadhafi was trying to negotiate his resignation and safe departure from the North African country, according to media reports early Tuesday.

“Expectations of more disruptive political upheaval had pushed gold higher,” said Ned Schmidt, editor of the Value View Gold Report. “Those expectations had become too radical and with calming in Middle East, those expectations could not be met.”

But Libyan opposition members now deny that they have been negotiating an exit deal with Gadhafi and some members of the U.N. Security Council have been mulling the prospects for a no-fly zone over Libya, according to CNN.

Libya has been engulfed in violence for nearly three weeks, and Gadhafi has reportedly lost control of cities in the oil-rich east.

Protesters in Yemen, Bahrain and other countries in the Middle East and North Africa demonstrated Tuesday.

“As long as uncertainty persists on markets and the situation remains unclear, the price of gold should remain well supported. The dip ... is therefore likely to be of a temporary nature,” analysts with Commerzbank said in a note to clients.

Strength in the U.S. dollar helped fuel a broad decline among metals prices. The dollar index
DXY, -0.01%
, which measures the U.S. unit against six currencies, rose to 76.788, up from 76.488 in North American trade late Monday. Read more on currencies.

In other metals trading, silver for May delivery
SIK11
closed off 21 cents, or 0.6%, to end at $35.66 an ounce.

Copper for May delivery
HGK11
edged higher, gaining 1 cent, or 0.3%, to settle at $4.34 a pound.

“Until we get above the 20-day moving average, copper will continue to be under pressure,” said Nedoss.

Adding to pressure on copper prices, inventories at the London Metal Exchange have been increasing, analysts at MF Global said in a note to clients Tuesday.

“In addition, participants may be getting wary about Chinese growth prospects after a series of pronouncements in recent weeks by the government saying that their emphasis would be on moderating growth and combating inflation going forward,” they added.

Copper has lost in recent days as investors feared higher oil prices could hamper the economic recovery, dampening prospects for the industrial metal.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.